Wenzhou plans to build "financial reform zone" to help SMEs

The city of Wenzhou has submitted a proposal to Zhejiang provincial authorities to build a private capital distribution center with an aim of becoming a “financial reform incubator” for small companies, the Financial Times reported, quoting state media. Zhang Zhengyu, an official with the city’s financial office, said that the local government will strive to turn Wenzhou into a pilot zone for financing services for small- and medium-sized enterprises. Non-governmental financing institutions, including micro-finance companies, private capital management companies and registration centers for private financing will be set up on trial bases, he added. Local mediua has recently reported that at least 80 business owners in Wenzhou have disappeared, committed suicide or declared bankruptcy; distressed businesses are estimated to owe over a total of US$1.6 billion to individual creditors in the city’s vigorous underground lending market, which was valued at US$384 billion as of March 2010 by China’s central bank.